No-tax plan on track

START-UP NY initiative gets its first designated business in ClassBook.com

The Capital Region has its first tax-free business under the START-UP NY initiative: ClassBook.com plans to greatly expand its current Rensselaer County operation by moving into space at 418 Broadway in downtown Albany. In announcing the designation on Tuesday, the Cuomo administration said the company would create 72 new jobs over the next five years.

The START-UP program, created last year by Gov. Andrew Cuomo to spur economic development around higher education centers, will allow the company's new operation to go without paying state and local taxes for 10 years — including state income tax for the employees whose jobs are created under the program's auspices.

ClassBook, an online provider of textbooks and other educational resources, applied for START-UP status through an affiliation with UAlbany. It will maintain offices and a warehouse in Castleton.

Although ClassBook currently employs fewer than a dozen full-time workers, its expansion plan calls for adding 62 jobs plus 10 full-time equivalents over the next five years, according to Michael Shimazu, UAlbany's associate vice president of business partnerships and economic development.

Shimazu said ClassBook has worked on recent research projects with the school's psychology department.

The company will invest $227,600 in setting up the new workspace over the five-year period, he said. It's likely that some of the newly created jobs will be based at other spaces designated to receive START-UP status. Those locations are currently being discussed.

Although the START-UP program was initially pitched as a way to attract business in clusters around campuses, designation can be conferred on any site located within a mile of any property owned or leased by a school — in UAlbany's case, nearby leased space at 99 Pine St.

Even more far-flung locations could be approved for tax-free status under certain conditions.

"At the end of the day, it's about attracting new jobs," said Jason Conwall, a spokesman for Empire State Development Corp., which administers the START-UP program.

The building to be occupied by the first wave of ClassBook's expansion is owned by T.L. Metzger & Associates, whose president, Tracy Metzger, is chair of the City of Albany Industrial Development Agency.

Linda Hillman, president of Rensselaer County Regional Chamber of Commerce, took a big-picture view of the company's decision to expand across the river.

"It's business — they have to do what's right for them," Hillman said. "... They're still in our region; they didn't move to South Carolina or anywhere else."

Anthony Pfister, CEO of ClassBook, said in a statement that he was pleased to be able to "expand close to home and create new senior-level professional positions and economic growth in the area."

The company will have to navigate one unique personnel hurdle: Current employees of the 22-year-old company will not be eligible to reap the substantial reward of not having to pay state income taxes for a decade. START-UP's rules make it clear that only those employed in new jobs — positions that don't result from the demise of an existing one — can tap that benefit.

"It can create a challenge, but the employees in place now are proud to be part of ClassBook.com and making the learning experience for students a better one, and they are excited about the growth of our company," Pfister said in an email. "And that sense of excitement overcomes any challenge."

The local news was part of a larger announcement that a new batch of 17 businesses will arrive or expand statewide as a result of START-UP. The new round of designations comes with a total investment estimated by officials at $14 million and job-creation commitments of at least 464 new jobs affiliated with UAlbany, as well as SUNY Buffalo, Cornell University, SUNY Downstate Medical Center, the University of Rochester and Stony Brook University on Long Island.

Tuesday's announcement brings the total number of businesses participating in START-UP NY to 41, representing what the administration projects as 1,750 new jobs and approximately $77 million in investment.